FPIs invested Rs 19,000 crore in stocks due to a decline in US inflation and the currency in November
- ByStartupStory | November 14, 2022
FPIs, this month have seen close to Rs 19,000 crore invested by foreign investors in Indian stocks, mostly as a result of the dollar’s depreciation and the US inflation trajectory stabilizing. Data from the depositories revealed that this followed net outflows of barely Rs 8 crore last month and Rs 7,624 crore in September.
Foreign Portfolio Investors (FPIs) were net purchases in August to the tune of Rs 51,200 crore and about Rs 5,000 crore in July prior to these outflows. Prior to that, beginning in October of last year, foreign investors were net sellers of Indian stocks for a nine-month period.
Chief Investment Strategist VK Vijayakumar of Finance Geojit Services. NSE 0.32% predicts that FPIs would increase their purchases in the upcoming days as US inflation shows signs of calming and dollar and US bond yields are falling. Additionally, among major economies, India’s prognosis for profits growth is the strongest. However, he said, values are becoming inflated.
The report shows that between November 1 and 11, FPIs invested Rs 18,979 crore in stocks. FPIs have sold a total of Rs 1.5 lakh crore worth of stocks so far this year.
About FPIs
FPIs were initially sellers in October, but the sell-off slowed dramatically as a result of a slight improvement in market sentiment, and they made a strong comeback in the month of November. The recent inflow was ascribed by Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities, to the dollar index, global bond rates, and a softening of inflation.
“It has not gone unnoticed how the Indian equities markets have held up against the odds and recent bearish indications, despite the upheaval that has gripped the world. According to Morningstar India Associate Director – Manager Research Himanshu Srivastava, “as the equity markets have surged relentlessly in recent times, foreign investors have returned to make sure they don’t miss out on the return potential that it offers.” A rather strong quarterly result also reflects the perception that the Indian economy is now more stable than its international counterparts. Additionally, he continued, the rupee’s stability against the dollar would have encouraged FPIs to invest in Indian stocks.
The macroeconomic front, US Fed rates, volatility in crude oil prices, shifting US bond yields, and the dollar index, according to Manoj Purohit, Partner & Leader – Financial Services Tax, BDO India, had a crucial role in influencing investment attitudes. On the domestic front, the RBI’s consistent efforts to control inflation trends, strong tax collections, and the recovery of domestic consumption to levels seen before the pandemic have given India a better position in comparison to other emerging markets, he said.
He claims that the transfer of a few sizable investments from China, which is currently suffering from the worst economic and political uncertainty, to India is another important factor in the perception of India as a preferred location for equity investments. On the other side, during the time period under review, foreign investors withdrew Rs 2,784 crore from the debt market.
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